The processing of the Diameter_Too_Busy error message is the same as the processing of Diameter_Unable_To-Deliver (3002) error message.
The SR attempts to retransmit the message to an alternate peer by a Diameter Base, and only when the delivery fails on all peers, the Diameter application (NASREQ, Gx, Gy) are notified for potentially one last retransmission attempt in which the destination-host AVP is cleared.
In both of these cases (Diameter_Unable_To_Deliver and Diameter_Too_Busy), an agent or server tells a downstream peer that it is either too busy to handle a request or unable to route a request to an upstream destination, perhaps because the destination itself is overloaded to the point of unavailability (RFC 7068, ยง4, Diameter Overload Control Requirements).